Talks over GM's Vauxhall and Opel businesses stall on new cash demand

Talks over the fate of General Motors' European operations, including the two
Vauxhall plants in Britain, failed to deliver an agreement after the car
maker asked the German Government for an emergency loan of 300 million euros
(£260m).

GM, whose parent company in Detroit faces a June 1 deadline to restructure itself or file for bankruptcy, had been in talks with the German Government and two preferred bidders for the European operations - Fiat and Magna International.

“This was a bizarre night” Karl-Theodor zu Guttenberg, Germany's economy minister, told Bloomberg, after eight hours of talks in Berlin. "The talks were turned upside down by GM’s unexpected demands. We do not have the assurances we need in order to extend a bridge loan.”

The German Government hopes to reach an agreement over the future of GM's European operations, which employ 25,000 people through Opel in Germany, by Friday.

Angela Merkel, the German Chancellor, plans to put Opel in a trust that would recieve 1.5bn euros in government loans. Magna, one of the bidders, said on Thursday night it may loan GM the 300m euros as long as it has an assurance from the German Government it will recover the money in the event GM goes bust.

Buffeted by overcapacity in the industry and the global downturn, the fate of GM lies in the hands of politicians in the US, Germany and, in the case of the Vauxhall plants, the UK.